Part 2: Monetisation options for carbon storage
In my previous blog post, we discussed the terminology of carbon capture, utlisation and storage, and went through three questions that define the C, S and U for concrete products. In this post, I will continue with the fourth step: Monetisation of carbon storage. There will be two more questions to ask. We will also phase a dilemma of CO2 that is permanently stored in concrete products when it is at the same time not officially there.
Step 4: MONETISATION
In addition to emissions reductions, using and storing CO2 in concrete production can bring about financial benefits. Depending on the source of CO2, we can either cut the costs related to emission allowances, or create carbon credits, which we can sell on the Voluntary Carbon Markets (VCM).
The emission trading systems, such as the EU Emissions Trading System, ETS, and the voluntary carbon credit markets both have their own rules and protocols for claiming emission reductions. This defines what kind of revenues and savings we can gain.
Fourth question: Can we create carbon credits or only emission reductions?
To sell carbon credits, you need biogenic CO2 that is permanently stored. With fossil CO2, you can only claim emission reductions.
If the CO2 is captured from fossil sources, according to the EU it can only be used as emission reduction at the source. This is meant to prevent double counting of emission savings. So, if we capture CO2 at a cement plant and store it in concrete at a concrete factory, it reduces the emissions of the cement plant, not the concrete factory.
Sometimes both the factories belong to the same company, and we don’t need any monetary transactions – it’s their reduction anyway. But if we talk about two separate companies, the cement plant would need to pay the concrete factory for storing their CO2. In this case, the concrete factory would not be able to reduce their own emissions with the CO2 that was stored in concrete production, but would get an extra revenue stream from the cement manufacturer for storing their CO2.
Monetising biogenic CO2
For CO2 from biogenic sources, the case is different. If the CO2 is biogenic, we have a choice.
Fifth question: For the biogenic CO2, do we want to
1) use the stored CO2 to reduce the footprint of the products and market them as a low-carbon alternative (the financial benefit then is a potentially higher market price for greener products), or
2) create carbon credits and release them to the voluntary carbon markets for extra revenue from credit sales?
We can’t do both, because that would result in double counting again. We need to choose this case by case, by product type or product batch.
The choice we make here results in a situation we sometimes half-jokingly refer to as the Schrödinger’s gas dilemma.
We have stored CO2 in concrete products, and the carbon is permanently stored inside the concrete. It will never leave the concrete. Verified. Fact.
When our customers then make an emission reduction claim and decide to sell the products as a low-carbon alternative, they count the stored carbon with the help of our CO2 management platform, make an EPD calculation, and show how much lower the carbon footprint of the product is compared to a reference product without carbon storage. Simple and clear so far.
Schrödinger’s gas
However, if the customer wants to sell carbon credits based on the storage to get an additional revenue stream, the carbon storage is locked for the credit market and can’t be used for product claims anymore (to avoid the double counting). The stored carbon remains inside the concrete, but it can’t be used for marketing the products as a low-carbon version anymore. The same amount of CO2 is there, but the products just became normal concrete products.
In other words: The gas is there, but we can’t claim it’s there.
Or if you view the situation a bit differently: The stored carbon is in two places at the same time, until we click on a button at the Carbonaide Service Platform and permanently define where it shall be.
As in the case of Schrödinger’s original thought experiment, this joke can also be considered a critique of the seemingly arbitrary carbon storage rules. There is reason behind this logic, though; as with any product, you can’t sell an item twice. The product in this case is stored carbon. If you sell the carbon storage as carbon credits and someone pays for them, you obviously can’t sell the same stored carbon to someone else in the products for making low-carbon claims at a construction site.
Many ways to benefit from the same carbon storage technology
The carbon storage in all the above CO2 use cases – both for fossil and biogenic, used for emission reductions, low carbon products or carbon credits – can be the same.
When we at Carbonaide work with the concrete industry, we enable both reductions and removal. If our customer uses CO2 from a fossil source, such as a stream of carbon dioxide from cement production or other industrial sources, our tools bring about emission reductions.
If the customers use the same Carbonaide process with biogenic CO2, the carbon storage is considered removal and can be sold as carbon credits or as a price premium for low-carbon products. The same amount of CO2 is permanently stored and even the end products are exactly the same, just the route to monetisation is different.
Side note: Additional confusion about carbon market terminology
In my earlier post (see Part 1) and above, we got through the CO2 sources and carbon storage alternatives and how they define whether you can sell carbon credits or just claim emission reductions. I hope things became clearer. Because now I unfortunately must make it all a bit more confusing again.
This is because there are people who use the same terminology differently. They talk about carbon dioxide removal, CDR, only when carbon dioxide is removed directly from air (the method more often referred to as Direct Air Capture, DAC). The term “carbon capture” then gets the meaning of capturing the CO2 at the source, for example at the plant, reducing the emissions.
Wait, what? You are saying that “capture” happens at the source, but direct air capture removes carbon dioxide from the air? Shouldn’t DAC then be called Direct Removal or something similar? Yeah, kinda, but you shouldn’t call it removal before the CO2 is also permanently stored. DAC without storage is still just capture.
In the same context, it has been said that the main difference between CDR and carbon capture and storage, CCS, is that carbon removal reverses past emissions, while capture and storage only reduces emissions. This means that with the help of CDR it would be possible to reach carbon negative production (storing more than is released), while CCS can at best achieve carbon neutrality (capturing all your emissions). This is true, but the results of calculations depend on how you define the product life cycle and what you count as emissions in the value chain.
If we again take an example from the concrete industry: When we calculate emission reductions for concrete products, should the emissions of cement production be calculated in the carbon footprint of concrete products, or should the baseline reference of reduction calculations be the same concrete product without carbon storage? Shouldn’t we count only what happens in the concrete factory, starting from when the raw materials enter the factory?
it is just a question of definitions. How would you define carbon-negative concrete?
Finally, a simple summary:
Carbon removal terminology can be confusing. Distinction between terms is basically just a definition issue, and the definitions are often vague (and may even seem against layman logic), and the same terminology can be used in multiple ways.
But keep the faith, you can get started by remembering only this:
1) From the point of view of Planet Earth, all CO2 is the same and removing it from the atmosphere permanently is a good thing.
2) To be able to use and store carbon dioxide in concrete production, we first need to capture some. Depending on the source, there are two types of CO2 we can use: fossil or biogenic.
3) Carbon storage can be temporary or permanent. Permanent storage means securely isolating the carbon from the atmosphere for at least a century, preferably longer.
4) The benefits of using CO2 in concrete production extend beyond just storage. CO2 also enables reduction of cement and faster production. We utilise AND store.
5) To sell carbon credits, you need biogenic CO2 that is permanently stored.
About Carbonaide
Carbonaide makes carbon-negative concrete economically viable. With the Carbonaide CO₂ solution, concrete manufacturers can utilise carbon dioxide to improve their products and store carbon permanently.
